For Release: March 11, 2009
CFTC Sanctions Chicago-based Walsh Trading Inc. $50,000 for Failing to Supervise an Employee’s Handling of Customer Accounts
The Firm Also Ordered to Strengthen its Supervisory Controls
Washington, DC ― The U.S. Commodity Futures Trading Commission (CFTC) settled charges of failure to supervise the handling of customer accounts against Walsh Trading Inc. (Walsh), a registered Chicago-based introducing broker, by sanctioning the firm $50,000 and requiring it to strengthen its supervisory oversight of associated persons (APs), employees, and agents.
Specifically, the CFTC order, entered on March 11, 2009, finds that from at least March 2006 to April 2008, Walsh failed to diligently supervise an AP’s (Walsh AP) handling of certain accounts managed by an unregistered commodity trading advisor (CTA), and lacked procedures to detect unauthorized trading of these customer accounts.
During the relevant period, the Walsh AP who managed Walsh’s Arkansas branch office solicited customers, primarily from the farming community, for an unregistered CTA and introduced those customers to a registered futures commission merchant (FCM). During this time, the Walsh AP placed orders at the unregistered CTA’s direction for at least five customer accounts. None of these accounts contained a power of attorney (POA) or a letter of direction authorizing the unregistered CTA, the Walsh AP, or anyone other than the customers to trade or manage their accounts.
The CFTC order finds that none of the five accounts were properly reviewed by Walsh to determine how they were solicited and whether they were to be traded as discretionary or non-discretionary accounts. This initial failure to supervise was compounded by a continued failure to diligently monitor the Walsh AP’s handling of customers’ accounts. Furthermore, the lack of any supervisory procedures and adequate oversight of the Walsh AP’s branch office enabled unauthorized trading by the unregistered CTA to continue undetected for two years.
The CFTC wishes to thank the National Futures Association for its cooperation in this matter.
The following Division of Enforcement staff are responsible for this case: Timothy J. Mulreany, David Reed, Michael Amakor, Paul Hayeck, and Joan Manley.
R. David Gary
Last Updated: March 11, 2009